Wednesday, April 23, 2014

Five Things You Need to Know about Faith, Work, and Economics

It is not uncommon for many people to think there is an unbridgeable chasm between Christianity and economics.

  • There are unbelievers who are aghast at the notion that economic truth has any affinity with anything smacking of religious belief.

  • On the other hand, many Christians assume economics is about how greedy people satisfy their lust of the eye and pride of life.

In fact, God is interested in both the spiritual and material aspects of his creation, and there are many truths that indicate the connection between economic theory and a Christian view of humanity and nature.

In fact, the opposite is true.

There is No Conflict between Christian Faith and Sound Economics

Economics is part of the created order and, hence, part of God’s general revelation (Psalm 19:1–4). We are only able to engage in science of any kind because God created a universe with purpose and natural regularities we call scientific laws (Genesis 1:1, 14–16, 20–25; Psalm 119:89-90; 72:5-7, 17; 89:34-37).

Additionally, God made every person in his own image (Genesis 1:27) and, therefore, like God, we engage in purposeful behavior.

Consequently, those economic laws that are implications of human action are reflections of God’s glory as he reveals it in creation.

The Laws of Economics Are Predicated on a Christian View of Man

Whether we acknowledge it or not, as implied above, economic laws, such as the law of comparative advantage and the law of supply and demand, are consequences of our being made in God’s image.

Therefore, we can understand more about the nature of man as we understand more about the image of God.

Because God thinks (Isaiah 55:8–9) and acts with purpose (Genesis 1:1–4, 14-18) and because man is made in the image of God (Genesis 1:27), it is reasonable to conclude that man is able to think and act with purpose, including within an economic setting.


Saturday, April 19, 2014

We Can Sleep Well with Yellen at the Helm

The editor at Against Crony Capitalism show us this revealing graph of the history of consumer prices since 1775:



Boy I am so happy that Fed Chair Janet Yellen is on the look out protecting us from deflation. Clearly lower prices has been the bain of our economic existence. If you are like Violet in A Charlie Brown Christmas*, the previous was sarcasm.


Don't you know sarcasm

Friday, April 18, 2014

What Sweden Can Teach Us About Obamacare?

Per Byland tells us in the Wall Street JournalByland is a professor in the Hankamer School of Business at Baylor University. He is also a citizen of Sweden, so he knows of what he speaks. He explains that, because a centrally planned and controlled healthcare system has neither a price system nor competition, health care services must be rationed by waiting. And waiting to receive health care can often be life threatening.

As Byland reports:
Sweden's problem is access to care. According to the Euro Health Consumer Index 2013, Swedish patients suffer from inordinately long wait times to get an appointment with a doctor, specialist treatment or even emergency care. Wait times are Europe's longest, and Swedes dependent on the public-health system have to wait months or even years for certain procedures, or are denied treatment. . .

Stories of people in Sweden suffering stroke, heart failure and other serious medical conditions who were denied or unable to receive urgent care are frequently reported in Swedish media. Recent examples include a one-month-old infant with cerebral hemorrhage for whom no ambulance was made available, and an 80-year-old woman with suspected stroke who had to wait four hours for an ambulance.

Other stories include people waiting many hours before a nurse or anyone talked to them after they arrived in emergency rooms and then suffering for long periods of time before receiving needed care. A 42-year-old woman in Karlstad seeking care for meningitis died in the ER after a three-hour wait. A woman with colon cancer spent 12 years contesting a money-saving decision to deny an abdominal scan that would have found the cancer earlier. The denial-of-care decision was not made by an insurance company, but by the government health-care system and its policies.

Thursday, April 17, 2014

Why We Cannot Hide Behind Core Inflation Anymore

Often, when government officials or central bankers wish to downplay price inflation numbers that appear to the masses as too hot to handle comfortably, they stress so-called "core inflation" which removes food and energy from the CPI because of their more volatile nature. Many think this is mere slight-of-hand rhetoric meant to confuse more than clarify. Most politicians and their intellectual enablers assert, however, that "core inflation" gives a better picture of overall price trends.

Well, regardless of the motive, we cannot hide behind core inflation anymore. As reported by Business Insider:
"Core" inflation — a measure that ignores food and energy prices — unexpectedly accelerated to 1.7% from a year earlier, up from 1.6% in February. Gains were driven by an acceleration in housing prices, which account for a little more than 41% of the whole index. The year-over-year change in the housing component rose to 2.8% from 2.5%, marking the fastest advance in housing prices since 2008.


Wednesday, April 16, 2014

Why We Should Not Rejoice About 2% Price Inflation

David Stockman has done excellent work showing the damage that seemingly mild-mannered price inflation at the rate of about 2% a year does to society. The purchasing power of the dollar shrinks significantly and we are generally worse off, especially those who must live on fixed incomes. Take a look at what the Fed has wrought over the past thirteen years, all the while trying to frighten the masses about the specter of deflation.


Tuesday, April 15, 2014

Why Yellen and Bernanke Should Be Sleeping Better

Consumer prices rose in March at an annual rate of 2.4%, according to the BLS. As a writer at Bloomberg News reveals, "The Fed’s goal of 2 percent inflation has proved elusive as the economic expansion was slow to gain momentum." The writer reminds us that the goal of the Fed is to perpetually shrink the purchasing power of the dollar. She also reveals the standard Keynesian mindset that economic progress means higher prices due to the economy being "overheated." In fact this could not be farther from economic reality. Economic expansion, by definition, means increases in output. As the supply of various goods increases relative to demand, their prices fall not increase, as more eager sellers bid down their selling prices. Economic expansion makes society better off, because consumers enjoy the opportunity to buy more goods at lower prices. All of us, thereby have the ability to achieve more of our ends. If prices are on the rise--and they are--this is due to the Fed's bankrolling monetary inflation, not due to any real recovery.

Friday, April 11, 2014

Does the Road Out of Poverty Run through Sweatshops?

Ben Powell, director of the Free Enterprise Institute at Texas Tech University, presented a great lecture last week to students in my Economic Expansion and Development class. Powell is on a tour promoting his latest book published by Cambridge University Press entitled Out of Poverty: Sweatshops in the Global Economy. Their function is not what you think.

Powell's primary goal is to educate people to the positive economic role sweatshops play in the lives of poor people who work in them. Additionally he hopes to encourage those who truly want to help the poor to do no harm mistakenly encouraging policies that will result in factories that close  because of rising costs and lower demand for their products. Such policies only make it more likely that poor workers in less developed countries have fewer opportunities and therefore will be faced with even worse working conditions and lower and less stable wages.

Here is Powell in a brief video that introduces many of the themes in the new book: